Oaken Update – November, 2017

When it makes sense to sell low

We all know the saying, “Buy low, sell high”. It’s the most basic rule of all investing, and of course it’s the main road to riches. Unfortunately, however, it’s easier said than done. There are very few people who have never seen an investment take a turn for the worse and put a dent in returns.

But if you’re holding an investment that’s not going as well as you had hoped, there is a silver lining. By selling it, you generate a capital loss—and you can use that loss to offset the tax you pay on all those other investments that are performing well. So as strange as it may seem, sometimes it makes sense to sell low. It’s called tax-loss selling.

‘Tis the season for tax-loss selling

You can sell a losing asset at any time during the year, but many people choose December in which to do so. By selling before the calendar rolls over, you can claim your capital loss when you file your taxes in March. Otherwise, you’ll have to wait another full year. One thing you need to remember is that when selling in December, you have to sell your asset earlier than you might think. The settlement date of a sale is three business days after the trade date. And this year, that means your sale will only count as having occurred in 2017 if you put your order in on Friday, December 22. That’s because Friday, December 29 is the last business day of the year, while Christmas Day and Boxing Day are both statutory holidays. (Note: we’ve seen many sources suggesting December 27 as the last day, however you won’t want to risk it.)

Should I sell or hold on?

There are a lot of reasons to consider selling a poor-performing asset. Maybe you think it’s time to cut your losses, and move on to another investment with more potential. Perhaps you have to sell an asset like a cottage, and shedding a bad investment will help cushion the tax blow due to capital gains. Or you might just want to get a tax refund from a previous year (capital losses can be applied retroactively up to three years). We don’t provide investment advice at Oaken, so before you decide to sell you should consult your accountant or financial advisor. But we do think you should know that in some circumstances, it actually does make sense to sell low.

Brushing up on your finances

We wanted to remind our readers that every year, November is designated as Financial Literacy Month. Financial planning and awareness is a year-round endeavour, but it’s great to have a special time dedicated to all those things we have to do to manage our money correctly.

Now is an especially good occasion to brush up on your financial skills, because as December is upon us you’ll want to think about taxes, charitable donations, tax-loss selling and other things that are affected by the year-end. Here are three things you might want to do:

1. If you haven’t already, check out the federal government’s Financial Literacy Month website. In addition to hosting a wealth of information about personal finance, it provides links to a financial literacy newsletter and an ongoing financial literacy blog. These are two great resources to browse in search of topics that might interest you.

2. Take a financial literacy quiz. There are countless tests and quizzes on the internet, but we like the one provided by the Financial Consumer Agency of Canada. It covers a wide range of areas, from self-assessment of your financial planning to tests of knowledge. Another of our favourites is from the Ontario Securities Commission, which lets you measure your own risk profile. (It’s short and fun!)

3. Review your financial plan. And if you don’t have one of those, it’s time to get cracking! This is a perfect holiday-season activity, as you’ll likely have some time on your hands, and you can use it to justify indulging in a gingerbread latte. The Moneysense website has an 11-step guide to creating a financial plan. You can also use it as a guide in reviewing your existing plan, and making sure you haven’t overlooked anything.

And one last word of advice: estate planning is also part of financial planning. Make sure your affairs are in order for your loved ones now, so as to spare them from stress and difficulty later, especially if they may have to act on your behalf.

The most wonderful time of the year?

It’s supposed to be the most wonderful time of the year, but the onset of winter can sometimes be difficult for a lot of people. Popularly known as the winter blues, sadness and depression during this period actually has a clinical name: Seasonal Affective Disorder, or SAD.

As this article from The Guardian explores, a likely cause of SAD is a lack of sunlight. Days begin to shorten after the summer solstice on June 21, and they reach their lowest point on December 21. Decreased sunlight is associated with sleepiness, cravings for carbohydrates and reduced physical activity, which can add up to a change in mood.

Be on the lookout for SAD

It’s important at this time of year to keep an eye out for SAD. Not just in yourself, but among family and friends. Adults are more prone to it than teenagers (although the incidence diminishes after the age of 50), and women appear to be more affected than men.

Serious symptoms of SAD merit medical attention. But if you’re suffering from a minor version, these tips can help perk up your mood and keep the blues away:

Increase your physical activity

Get outdoors more often, and make a habit of taking a walk in daylight hours

Keep your curtains open during the day and sit near the window

Trim tree branches that reduce light into your home

Stick to a regular sleep schedule

Moderate your intake of carbohydrates

Head south for a sunny vacation, if you can afford it

Another thing to consider is that other people can lift your mood. Being sociable—dining with friends, going out to movies, joining a book club—is a great antidote to the blues. The holiday season also provides numerous opportunities to renew your social contacts, so make the most of the upcoming month to get a boost going into the new year. And remember, spring is only a few months away…

Recent events, and two winners who really cleaned up!

A big thanks to everyone who stopped by the Oaken booth during our two most recent events, the Toronto ZoomerShow and the National Women’s Show, both of which took place within the last month. We saw a lot of familiar faces, but even more new ones, and we were delighted that everyone had such an enjoyable time. We’ll be attending more events during 2018, so keep an eye out for your chance to drop by and meet us in person. And, of course, to enter for one of our prize draws.

Speaking of which, the two shows produced two brand-new winners. Gail Zaretsky won our draw at the Toronto ZoomerShow, and Chelsea Keeping came up lucky at the National Women’s Show. Both took home a brand-new Dyson vacuum cleaner, which should come in handy keeping everything spic and span this holiday season.

If you’re not able to meet us at an event during the year, we invite you to visit us at one of our Oaken stores in Calgary and Toronto whenever you have a chance. Coffee, tea and a chat are always on the menu, as well as advice about our savings options. You can also enter our quarterly prize draw by leaving your contact details on one of the iPads available. Best of luck to everyone taking part!

Reading corner

With the end of the year in sight, here’s some reading to brighten your mood for the holidays…